CPA, Star Marianas talks fail

Negotiations between the Commonwealth Ports Authority and Star Marianas Air Inc. to resolve their lease dispute has collapsed, with CPA using strong language to describe SMA president Robert Christian as “insincere” and “disingenuous.”

CPA, through counsel Robert T. Torres, wrote SMA counsel Mark A. Scoggins last Monday, April 12, describing as disappointing what it characterized as SMA “reneging on its sign of good faith.”

Unsurprisingly, Torres said, Christian’s claims in the Senate meeting last March 23 that SMA wanted to engage in mediation with CPA in good faith “were insincere and disingenuous.”

As of press time yesterday, Saipan Tribune was still awaiting comments from Scoggins or Christian.

With the negotiation’s failure, CPA’s motion to dismiss SMA’s lawsuit went through last Thursday, April 15, before Superior Court Associate Judge Joseph N. Camacho.

After listening to the arguments, Camacho ordered CPA counsel Joseph Hallahan and Scoggins to file their respective proposed orders, Saipan Tribune learned.

Last March 23, CPA and SMA agreed during a meeting before the Senate Committee on Public Utilities, Transportation, and Communications to finally resolve their lease dispute that began in 2012.

Star Marianas, though Christian, expressed its willingness to the Senate committee to engage in settlement discussions and mediation with CPA.

However, in CPA’s Monday letter to Scoggins, Torres said that two days after that Senate committee hearing, on March 25, SMA sent a letter to CPA demanding an audit of CPA under the Airline Use Agreement prior to engaging in mediation, claiming the parties would be able to negotiate more effectively with audit results.

On March 31, 2021, CPA responded that it believed SMA was attempting to use the audit as a premature discovery request in the pending litigation to tee up its damage claim against CPA, which is the main subject of CPA’s motion to dismiss.

Nevertheless, Torres said, CPA responded that it would treat SMA’s demand for the audit as a request under the Airline Use Agreement and would be amenable to such an audit.

That same day, March 31, Torres said CPA called for a settlement conference during the week of April 5-9, 2021, pursuant to SMA’s comment to the Senate committee that the company wanted to engage in mediation discussions to resolve its dispute with CPA.

Torres said that SMA rejected CPA’s request for a settlement conference last April 1, with SMA pressing its demand for an audit of CPA under the Airline Use Agreement, and insisting on seeing the results of the audit prior to engaging in mediation.

Torres said SMA claimed that the information from the audit would assist in refining the computation process to provide a mutually acceptable accounting process on CPA’s rates.

Torres said SMA also affirmed that “furthermore, as a sign of good faith, [Star Marianas] is willing to stipulate to a continuance, for a reasonable amount of time, of the currently scheduled hearing date for the motion to dismiss to give mediation an opportunity to succeed and to minimize further legal expenses for both sides prior to mediation.”

In CPA’s response last April 11, Torres said CPA asked SMA to confirm that it understood that the purpose of mediation would be for settlement of the issues agreed upon by the parties, specifically the $2,586,892 that SMA owes CPA, SMA’s response to the reconciliation, and SMA’s concerns with the Tinian West End terminal and the Rota terminal.

Torres asked SMA to confirm that mediation would not be used as forum to revise CPA’s rates and methodology.

Torres said CPA also accepted SMA’s gesture of “good faith” to continue the hearing for last Thursday, April 15, 2021, and sent a draft stipulation to continue the hearing for 45 days.

On the afternoon of April 11, Torres said, SMA responded that the stipulation was sufficient and that it would confer on CPA’s letter. Less than 10 minutes later, he said, SMA requested CPA to hold off on filing the stipulation to continue the motion hearing.

On the morning of April 12, Torres said, SMA advised CPA that it had decided to proceed with the motion hearing, in direct contradiction of Star Marianas’ promise that it would stipulate to continue the motion hearing as a sign of its good faith in order to give mediation an opportunity to succeed and to minimize further legal expenses for both sides prior to mediation.

The dispute between CPA and SMA began in 2012 when CPA tried to collect on $2.6 million that it says SMA owes CPA in unpaid passenger facility charges.

SMA, on the other hand, alleges that CPA imposes excessive charges that are not based on fair market value, CPA’s operational costs, or the weight of SMA’s aircraft.

In December 2020, SMA sued CPA in the Superior Court, alleging breach of contract. CPA filed a motion to dismiss the lawsuit and also filed counter-claims against SMA.